Foreign Nonprofits: Doing Business Out of State
If your nonprofit corporation is preparing to do business in a new state, you’ll need to register your nonprofit organization as a foreign entity in every state in which you want to solicit donations or sell products and services. The act of registering your nonprofit to do business out-of-state is known as “qualifying a foreign entity,” and below you’ll find everything you need to know about qualifying your nonprofit to do business in all 50 states:
The Qualification Process
Qualifying your nonprofit to do business outside of the state in which it was incorporated is a state-by-state process. Each state has particular requirements, but all states have one thing in common: a certificate of authority form. The actual name of the form varies slightly from state to state, but in each state the certificate of authority is the main document you will need to file. This form is filed with the secretary of state or corresponding agency.
In order to complete a certificate of authority, you will need the following:
- The name of the nonprofit (if the name is already taken, you will need to file an assumed/fictitious name with the state).
- The physical address of the nonprofit.
- The name and address of your registered agent (in the following states, your registered agent’s signature is required on the form: AZ, FL, KY, LA, MD, MS, NM, OH, WA, and WY).
- The names and addresses of the nonprofit’s directors and officers.
- The purpose of the nonprofit.
- A certificate of good standing from your nonprofit’s home state(most states require that this certificate be dated within a certain range of the filing; usually 30 to 90 days).
- Filing fee (this fee ranges from $25 to $500, depending upon the state).
Once you submit the filing, the state will typically send confirmation within two weeks.
In addition to filing certificates of authority, most states will require your nonprofit to register as a charity if your organization will be soliciting donations of any kind. Your nonprofit will file charity registration forms with the state’s attorney general’s office. In most states, your nonprofit’s charity registration will need to be renewed annually. To complete a charity registration, you should be ready to include the following:
- The nonprofit’s name and contact information.
- The names and addresses of directors and officers.
- Answers to questions about the organization’s financial and tax status.
- The methods nonprofit will use to solicit donations.
- A copy of the nonprofit’s most recent tax return.
- For nonprofits whose annual revenue exceeds $500,000—an audit prepared by an independent accountant.
If you will be registering as a charity in more than one state, you may want to complete your registration by filing a Unified Registration Statement for Charitable Organizations. This is a universal form accepted by 37 of the 40 states that require charity registration (Colorado, Oklahoma, and Florida have state-specific forms that you will need to file).
Initial and Annual Reports
All states require registered business entities to file comprehensive reports of your nonprofit’s activities. In most states, these reports are due annually, although you’ll want to verify report deadlines as some states have biennial, or even decennial requirements. For each state that you register your nonprofit in, you’ll need to file annual reports with those states.
Also, be sure to note the following 10 states will also require you to file an initial report, which can be filed with the secretary of state or corresponding government agency: Alaska, California, Connecticut, DC, Georgia, Louisiana, Missouri, Nevada, New Mexico, and South Carolina.
Be aware that you will need a registered agent in each state where your nonprofit corporation is qualified to operate. A registered agent accepts due process and official mail on your nonprofit’s behalf and is required to physically reside in the specific state. You can find many reputable registered agents online with a quick search. Many resident agent services will, in addition to accepting official documents on your behalf, help keep track of and file your annual reports. Be sure to shop around and find the registered agent service that best suits your nonprofit’s needs.